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Grain Supply Update: Oct. 1, 1996



Grain Supply Update: October 1, 1996
			© Geri Guidetti, 1996

		USDA Reevaluates Corn, Soybean Stockpiles 

	Yesterday, the Agriculture Department released a report in which 
it raised its estimates of U.S. corn and soybean stockpiles.  Instead of 
last month’s estimate of 409 million bushels of corn available in the 
supply chain, it now estimates there were still 426 million bushels left 
on September 1.  In addition, forecasts for warmer, drier weather in the 
late-planted Midwest corn belt and a diminishing chance of an early fall 
frost have raised prospects for a decent harvest this season.  As a 
result of the new estimate, the price of corn targeted for December 
delivery dropped to $2.9675/bu in the Chicago trading pits, nearing a 
yearly low of $2.955.  You may recall that corn prices hovered around 
$4.00 a bushel as word of dangerously low supplies and the real 
possibility of running out of corn hit the markets this season.  
Is this report reason to cheer?  Is the potential for a shortage in corn 
and all of the food industry "dominoes" (cattle, poultry, sweeteners, 
etc.) dependent on corn, over?  Is the market’s optimism warranted?  
Take a closer look at the 426 million bushel figure.  Even if this 
higher, revised figure is correct, this stockpile is the smallest U.S. 
stockpile since 1976.  In fact, it is 72.7% lower than last year’s 
mediocre figure.  If a decent harvest is realized this year, it will not 
serve to build up the stockpile to levels anywhere near those analysts 
admit are essential for food security.
	Soybean harvests are beginning this week.  As you already know, 
much of the nation’s soybean crop was planted late in major Midwest bean 
fields.  Many of these were planted as replacements for failed corn.  
Warm, dry weather predicted this week should help those beans still 
behind to mature. This would be a good break.  The USDA had most 
recently estimated ending soybean supplies, before this year’s harvest, 
at 170 million bushels.  Yesterday it estimated there were 183 million 
bushels left on Sept.  This is still 20 million bushels higher than most 
trade analysts estimate.  Soybeans targeted for November delivery 
dropped over 25 cents yesterday, to $7.58/bu.  You will recall that 
soybeans were hovering around the $8 mark this season.  Again, one must 
ask if the new estimates and optimism over weather prospects change the 
big food picture. 
	A close look at the global grain carryover stocks – those stocks 
available to feed this nation’s and the world’s peoples until the 
following season’s harvest – is sobering.  According to 1994 data from 
the USDA, since 1987, the world’s grain and feed stocks have been drawn 
down dramatically despite intensive agricultural efforts to reverse the 
trend.  Some numbers: The all-time high for grain carryover was 465 
million tons in 1985.  This was the equivalent of a 104 day global 
supply.  Over eight years grain supplies were reduced to 302 million 
tons a year.  The annual depletion actually exceeded the harvests during 
these years.  In other words, the world’s growing consumption of grain 
since 1987 has been fueled by eating what was in storage from previous 
years’ harvests.  As of 1995, the global grain stocks were down to 59 
days of consumption.  This year, 1996, corn stocks alone were down to 48 
days.
	The complete picture will not be in until well after this 
season’s harvests are finished. Despite the USDA’s new estimates and the 
markets’ malarial responses, the sad truth is  the world is only one 
poor growing season away from serious food deficiencies.  And, no, such 
a poor year will not limit suffering to Third World countries.  Given 
the recent and predicted ten more years of extreme weather patterns, it 
would be prudent to rethink our nearly total dependence on traditional 
food supply and delivery systems…Geri Guidetti, The Ark Institute
***********************************************************************Build Your Ark!  How to Prepare for Self-Reliance in Uncertain Times:
Book I: Food Self-Sufficiency     http://www.lis.ab.ca/walton/geri.html
Grain Supply Updates:     http://www.lis.ab.ca/walton/geri1.html
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